Hot, Dynamic and Booming! - Geothermal Energy in Iceland
Investors, project developers, consultants and geoscientists visited the Eldorado of geothermal energy from 15 -18 October 2007.

Freiburg - An executive study trip to Iceland, organised by EnEd in cooperation with Sterr-Kölln & Partner and forseo, allowed the participants a fascinating insight into the enormous potential of deep geothermal energy and made the dynamics of this market instantly tangible. At an exclusive conference, held for the participants of the trip with key companies from Iceland such as Enex, Exorka, ÍSOR, Glitnir Bank and Reykjavik Energy Invest (REI), the strengths of the Icelanders became clear. Iceland is channelling its resources in order to take over a leadership role in geothermal energy worldwide in the future. In fact, the country already convinces with its impressive figures: six power plants produce about 450 MW electric energy of which 20 percent is generated from geothermal energy – 1.7 TWh p.a.. Geothermal energy supplies around 90% of Iceland’s heating demand. Moreover, six additional power stations of several hundred Megawatts are already being planned.

The executive study trip with international experts took place at a turbulent time. At the beginning of October, the announcement of the merger of Geysir Green Energy, founded only nine months earlier, and REI, the investment branch of the regional energy provider Reykjavik Energy, had a remarkable impact on Iceland’s politics and society. The merger, interlinking the international activities of a public energy provider and a commercial company even resulted in a change in the city council government in Reykjavik. The Icelandic people, however, are not easily put off by turbulence. Ásgeir Margeirsson, one of the CEOs of Reykjavik Energy Invest, which was founded in March, is convinced they will become the global market leader in geothermal energy. According to his statements, the company is already worth around 745 m Euros, covering the complete value chain from explorations to plant technology. REI has majority shares in Iceland Drilling, Hekla Energy, Enex, Enex China as well as additional shares in Hitaveita Sudurnesja, Exorka, Canadian Western Geo Power and the oil-company PNOC from the Philippines. They expect around 4,000 MW of installed power with an approximate 5-8 bn US$ investment sum in the next four years. North America especially, is seen as a market with high potential, but the German market is also considered promising. Around 460 m Euros equity has been invested by the key shareholders Reykjavik Energy, FL Group, Atorka and Glitnir Bank in the geothermal market. In 2009, REI is planning to launch its IPO.

With more than 50 years of experience in successful utilisation of geothermal energy, it is no wonder Iceland’s companies feel so strong. Within the last 20 years, this market has been rapidly expanding with new power plants built and existing plants enormously enlarged. Svartsengi power plant has already been producing electricity since the end of the 70s. Five more plants have been added in the meantime, generating power with highly developed technology. Nesjavellir is still the power station with the biggest capacity where 200 degree-hot steam powers four turbines of 30 MW each. 120 MW of produced electricity and 380 MW of thermal energy is thus produced mostly for the capital Reykjavik. After being used to produce power, the hot water is transported over a 27km long pipeline and district heating grid in the direction of Reykjavik. Due to its optimised insulation, there is less than two degrees heat loss. The pipeline runs above ground, is mounted on roller bearings and is very flexible. This flexibility has the advantage of making the grid both earthquake-proof and adaptable to thermal expansion.

The hot water from the piping system is used in ‘cascades’. It is used to heat greenhouses, to supply swimming pools with hot water and to cover about 90% of the total demand of hot water and heating in private and public houses of Iceland’s 300,000 inhabitants. The still 20°C-hot waste water is used to keep the roads and pavements ice-free. Heating costs in Iceland are only a fifth of what would have to be paid for fossil fuel.

The low energy costs due to hydro and geothermal energy have aroused interest abroad. Energy-intensive industries like the aluminium industry are already there. Google and Microsoft with their energy-intensive server farms and their high demand for cooling are thinking about relocating those farms to Iceland.

The success story of Iceland’s geothermal energy is set to continue – only now, potentially on a deeper level. With the launch of Iceland Deep Drilling Project (IDDP) a new chapter in geothermal energy could be opened. The panel, made up of the national energy service ÍSOR and the country’s major energy providers, wants to study new drilling technologies as well as the economic feasibility of extracting energy from supercritical hydrous fluids. In order to achieve this, a more than 5,000 m deep borehole has to be drilled into a high-temperature hydrothermal system, where temperatures of 400 to 600 degrees are expected. Transforming heat into electric power will thus be possible to a much greater degree of efficiency. Although IDDP is a very ambitious project, there is no doubt the Icelanders will rise to the challenge. They know their strengths and are able to draw on their impressive track record of achievements and successes.

Germany also has an enormous potential in geothermal energy, which could make a significant contribution towards providing sustainable energy based on renewable energies. Certainly, the German geothermal resources are very different to those in Iceland. However, there is enough experience and potential to transfer the existing know-how to Europe. “The trip gave an impressive insight into how to use existing geothermal potentials to great success,” participant Dr. Michael Kraml summed up. Alexander Richter from Glitnir Bank declared: “We are ready to support Germany’s development in geothermal energy with our expertise to increase the amount of renewable energies and to achieve the aims of climate protection with joint efforts.”

EnEd is an international education centre for renewable energy and energy efficiency. EnEd supports the international growth markets of sustainable energy supply and energy efficiency.

If you require further pictures or information about the trip, please contact +49 (761) 490540, email: marissa.walzer@sterr-koelln.com>marissa.walzer@sterr-koelln.com.



Freiburg, 30 October 2007


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